Moreland Property Group » CenterPoint

Virginia Rejects Port Proposals

Brad Rodgers — Sat, 11 Sep 2010 10:12:11 +0000

On Friday, Transportation Secretary Sean Connaughton announced that the Commonwealth was no longer going to consider the three proposals submitted to privatize the operations of the Port of Virginia. The three proposals were submitted by Centerpoint Properties, The Carlyle Group, and Goldman Sachs. Connaughton said that the the proposals significantly undervalued the operations of the port and were not reflective of the recent gains in traffic or the new lease of the APM terminal.

Given the economy and the recent APM transaction, this seems like a very reasonable way to proceed. I know the Port will be uncovering various synergies withthe APM facility as they get further into its operations. These will lead to operational improvements at 3 original terminals as well as the APM terminal.

Is CenterPoint making an offer to privatize the Port of Virginia?

Brad Rodgers — Wed, 11 Mar 2009 12:38:16 +0000

The dailypress.com website is reporting that an offer may be forthcoming this week from CenterPoint properties to privatize the Port of Virginia. Their sources indicate that an offer may be delivered to Virginia Transportation Secretary Pierce Homer this Friday. Although the Port was not actively soliciting bids, privatizing their operations is something they have been examining after Del. Harry “Bob” Purkey, R-Virginia Beach organized a special committee to vet the option. It could mean a significant upfront payment from CenterPoint which could help to plug the budget gap and fund other necessary transportation improvements.

However, privatization comes with several big question marks. As it stand right now, Virginia International Terminals operates the Virginia terminals. They are a state owned organization and are currently focused on increasing the amount of cargo that flows through Virginia. If CenterPoint were to operate the terminals, that focus may change to protecting their financial bottom line. However, the two are more closely aligned than you might expect. Port rankings are typically done by TEU volume (VIT’s goal), and shippers follow activity (more customers for them to work with, choose from and steal) and that flows through to CenterPoint’s bottom line. So, the higher Virginia ranks the more business it will do and (presumably) the more profit it generates for CenterPoint. Everyone wins. If Virginia does agree to do this, I would suggest they structure significant rent penalties for CenterPoint if TEU volume targets are not met.

CenterPoint is not new to the Virginia market as the Chicago based developer recently won approval last month for its $350 million industrial park in Suffolk. Although they are majority owned by CalPERS, I am not familiar with their terminal operating capabilities. They may be exceptionally qualified to operate a port terminal, I’ve just always known them as an industrial real estate developer.

If the proposal does arrive as expected, I am sure it will spawn a lively debate. It will be interesting to see both sides present their arguments in the coming months. I’ll keep you posted…

Economy:1 – Kansas City Logistics Park:0

Brad Rodgers — Tue, 17 Feb 2009 18:23:45 +0000

The Link: LINK

The Story: According to the Kansas City Business Journal, BNSF Railway is slowing its efforts to build its intermodal freight hub in Gardner. This freight hub is to be the centerpiece for the Kansas City Logistics Park – a 1,000 acre, $735 million industrial park. Without the intermodal hub, the industrial park project is effectively dead in the water. The projects developer, The Allen Group, had apparently been notified by BNSF at the same time as the city, county and Corps of Engineers. BNSF maintains that progress has not stopped and they are still pursuing Corps approval for some wetlands issues. However, the company is letting the economy dictate when the major construction will begin and end.

CenterPoint project is a “go”

Brad Rodgers — Thu, 22 Jan 2009 18:59:09 +0000

Last night the Suffolk City Council approved CenterPoint’s request for a rezoning at their site off of Holland Road. The council voted 7-0 in favor of the rezoning but has still not resolved the issues of how a widening of Holland Road would be funded. CenterPoint has committed to pay almost $4 million towards the project, which may be enough to get some of the preliminary design work completed and get the project “shovel ready”. However, with over 400 statewide transportation projects “shovel ready” today, the Holland Road widening stands little chance of receiving bailout funds. My best guess is that future projects will bear the burden of improving the infrastructure – reducing Suffolk’s competitive position as the port continues to grow.